“The three great essentials to achieve anything worthwhile are: hard work, stick-to-itiveness and common sense.” Thomas Edison
It’s amazing how much good information lives on your financial statements. Too bad no one can understand what they mean.
According to a beer industry study, 80% of wholesalers share some form of financial info with their management teams. The question is, do they know how to read it? And more importantly, do they know how to use it?
In this series of articles we’ll explore finance for non-financial managers. We’ll cover financial numbers that are meaningful to your sales manager and operations guys.
This is common sense financial information – Operational Finance. It’s finance that regular people can understand and use to improve the business.
The financial statements show the income, expense, and bottom line of your beer business. They show assets, liabilities and equity. They tell a story, but the language is foreign to most everyone except the bean counters.
Operational finance for non-financial managers presents the numbers in plain English so your managers can understand and use the information to improve financial results in your beer business.
The first step to implement operational finance in your beer business is to individualize the finances by department. A typical beer distributor will have many (or all) of the departments listed below:
- Sales
- Merchandising
- Delivery
- Warehouse (day shift)
- Warehouse (night shift)
- Admin (Customer service, Accounting, HR, IT)
- Garage / Truck maintenance
- Facilities / Building maintenance
Operational finance identifies and quantifies the most important functions in each department.
People understand functions, roles and responsibilities. They understand what they are supposed to do and how they are supposed to do it. However, they don’t always know how these activities can be quantified and how they impact the financial statements.
The goal is to show them how to quantify and measure their performance – what they do, and how they do it. By doing so, you’ll give them a tool to improve the financial results in the beer business.
This is the power of finance for non-financial managers. Teach managers and employees to measure what they do, and show them how it ties back to the financial statements.
The financials are a representation of actions and decisions that employees make every day. Operational finance helps to measure and report on these actions and decisions on a department level.
